Consumer confidence posts large gain - back to Sept 08 levels

Great news, since 2/3rds of the economy is driven by consumer spending (vs B2B):

Stocks surged Tuesday after the Conference Board said consumer sentiment rose in May to the highest level since September. All the major stock indicators rose more than 2 percent, including the Dow Jones industrial average, which jumped 200 points.

The research group's Consumer Confidence Index vaulted to 54.9 from 40.8, soaring past the 42.3 that economists surveyed by Thomson Reuters expected.

Investors watch the indicator for signs of whether consumers might start shopping more or making bigger purchases such as cars and homes. Spending by consumers makes up more than two-thirds of U.S. economic activity.

Jim King, chief investment officer at National Penn Investors Trust Co., said the improvement in consumer confidence surprised investors. With unemployment still high and expected to go higher, many market watchers thought the mood on Main Street would remain gloomy.

Further evidence to back up my argument earlier today about unemployment rates leveling off in SF. As consumer confidence rises, so does consumer spending, which leads to increased B2B spending, which leads to decreased layoffs, more people remaining in their homes (less foreclosures), and confidence to purchase a first or move-up home.

Keep in mind Sept '08 was the beginning of the financial crisis, when Lehman went under and Merrill was bought by BofA.

SOURCE: AP via Yahoo Finance